United States v. Braxtonbrown-Smith

Denise Braxtonbrown-Smith (defendant) was employed by Psychological Development Associates (PDA), which received Medicaid payments for services provided to intellectually challenged adults via Better Treatment Centers (BTCs). PDA also received Medicaid payments for services purportedly provided at PDA’s free-standing clinic. However, PDA never established the clinic. Instead, Braxtonbrown-Smith and another PDA employee submitted false bills to Medicaid for services that PDA never provided. PDA’s total false Medicaid claims exceeded $1.6 million. Braxtonbrown-Smith and her accomplice together used $500,000 from PDA’s bank account for their personal expenses. After a jury trial, Braxtonbrown-Smith was convicted of, among other things, money laundering in violation of 18 U.S.C. § 1956(a). Braxtonbrown-Smith appealed, arguing that the United States failed to meet its burden of proving that the allegedly laundered money came from unlawful activity. Per Braxtonbrown-Smith, the United States impermissibly relied on a presumption that funds withdrawn from PDA’s account, which commingled lawful and unlawful proceeds, involved unlawful proceeds. Instead, Braxtonbrown-Smith argued that (1) the plain language of § 1956(a)(1) required the United States to trace each withdrawal from PDA’s account for her personal use to a Medicaid reimbursement and (2) she was entitled to a presumption, pursuant to the rule of lenity, that withdrawals from a commingled account involved “clean” money (i.e., money untainted by illegality).